A Depository Institution Can Make Highly Illiquid and Long-Maturity Loans

question 3

Multiple Choice

A depository institution can make highly illiquid and long-maturity loans with funds obtained by issuing transaction deposits because

• A) depository institutions tend to be owned by individuals with a high tolerance of risk.
• B) most transaction depositors have very transaction patterns.
• C) depositors, taken as a group, behave in a predictable manner.
• D) depository institutions are skilled at evaluating credit risks.
• E) depository institutions have a large pool of assets to draw from.

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Definitions:

Recruitment

The process of identifying, attracting, interviewing, selecting, hiring, and onboarding employees.